Start-up companies are fueling new jobs in Wisconsin, according to new study

Companies less than a year old accounted for all of Wisconsin's net new job creation in 2012, according to a new study conducted by two University of Wisconsin-Madison researchers.

More than half of all net new jobs in the state in 2012 were created by companies with less than 50 employees, according to the study, by Tessa Conroy and Steven Deller, a research associate and professor, respectively, in the department of agricultural and applied economics at UW-Madison.

But when the pair looked at it by age of company, they found that the youngest companies — those less than a year old — created all net new jobs in Wisconsin during that year.

Those companies have not been around long enough to lay people off, which tilts the net job creation account in their favor. However, the bottom line: Start-ups contribute more than 100% of net job creation and offset the net job losses of older companies, Deller said.

Given the disproportionately large share of job creation from new business start-ups, supporting entrepreneurs may be one of the most effective public policy levers, he said. These findings indicate that supporting new business owners, even those that do not yet have employees, could lead to higher gross and net job creation, he added.

"The story really is we don't want to ignore the larger established businesses, but we want to devote more time and effort to business start-ups," Deller said.

Generally, only half of newly established companies survive to five years, Conroy and Deller said. But in some ways, given that young companies create the jobs, that high failure makes it even more vital to have a high rate of start-ups, they said.